Learning from NGOs

What difference would it have made if Starbucks had struck up some really close allies in the NGO world in recent years?

Well, for one, the company might have realised that its tax-avoidance strategies in the UK were a liability waiting to blow up.

There’s an easy assumption that charities and nongovernmental organisations (NGOs) have a lot to learn from business. But business could also learn much from talking to NGOs, at least according to a recent poll by IPSOS Mori.

The polling group conducted an international survey asking whether major corporations should be listening to global NGOs. Around half (49 per cent) of all adults asked the question in 24 countries believe that big companies should be listening to what NGOs have to say about their behaviour.

In some countries – India, Brazil, South Korea and South Africa – the proportion of people who thought that companies should listen to NGOs was much closer to two-thirds.

In Europe, people also expect that charities should influence business. In countries like France and Sweden, almost half of people questioned by IPSOS Mori think companies should listen to organisations like Greenpeace, the World Bank and the Red Cross.

However, in Britain and in Germany there is less certainty about the role charities should have, with only 41 per cent and 39 per cent in each country thinking that businesses should listen to NGOs. But in Japan, the US and China, opinion is at the other end of the scale.

On whether NGOs actually influence the behaviour of companies, however, it seems that large companies rarely live up to the public’s expectations. In most countries, the number of respondents who thought that companies did actually listen to NGOs was far fewer than those who thought they should.

Ed Gillespie, co-founder of sustainability communications consultancy Futerra, recently hosted a breakfast discussion among three companies – DIY group Kingfisher, beauty company L’Oreal and brewing giant SABMiller – that want to buck that trend. He calls them ‘sustainability champions’.

‘The days when you could work with charities as a sort of philanthropic fig leaf to hide your shortcomings are waning. Unless your philanthropy is aligned with your core business it won’t work,’ he says.

If a company’s work with NGOs is not integral to its business, then the relationship will get dropped like the proverbial hot potato as soon as there is even a mild threat to the bottom line. Gillespie argues that this was evident with climate change programmes during the financial crisis.

Gillespie says companies need to ask themselves what their fundamental purpose is. ‘To improve shareholder value may be the technical answer, but it is not enough. These days, you have to build a movement,’ he says.

He believes that we are potentially entering an era when ‘we will wonder why we allowed the most brutal edge of commercial capitalism to be so unfettered’.

‘Really visionary businesses are asking Why are we here? and What value can we add? The Lever Brothers wanted to promote hygiene and public health, and they could do so by selling soap,’ he says, of the Port Sunlight company from which Unilever was born.

Companies that behave badly will be punished and the Internet is making it much easier for sins to be exposed. That’s where NGOs come in. If companies understand an issue and act on it before the NGO feels the need to mount public action, it can have a real impact on business and the bottom line.

For example, Vedanta, a mining company, saw its share price underperform its peers by 29 per cent when Amnesty International highlighted its poor corporate responsibility record.

Last year, Friends of the Earth activists covered Apple stores with digital graffiti to raise awareness of Apple’s refusal to confirm or deny that it used tin from environmentally damaging supply chains in Indonesia. In comparison, Samsung, Nokia and other smart phone manufacturers were praised for being quicker to respond to the problem.

NGOs can offer valuable perspective and because they are not on the payroll, they can speak as they find – unlike many hired advisors. If stakeholder engagement is to mean anything, it is about listening to different viewpoints and acting on those insights.

And when businesses do work with organisations that are not like them, they may find new ways of resolving big problems. Since 2007, Friends of the Earth has worked with Eurostar on its Tread Lightly campaign to reduce its environmental impact. The organisation has given objective external advice to the train operator, and also works to make sure that Eurostar is reporting its polluting activities correctly.

More recently, Friends of the Earth worked with B&Q, the DIY store owned by Kingfisher, to monitor the Great British Bee. In 2013, in an effort to help protect bees, the company stopped selling three pesticides linked to the decline of the insect. It also introduced the Royal Horticultural Society’s Perfect for Pollinators logo that helps shoppers identify which plants would help support bees in their own garden.

Arlo Brady, managing director of the corporate practice at Freuds communication consultancy, which has worked closely with Comic Relief over the years, says that there are many reasons for businesses getting involved with NGOs.

‘Staff can be a big driver. People want to be involved in doing something good,’ he says.

But perhaps the best reason to pursue a project with an NGO is if it is mutually beneficial, he argues, citing Lifebuoy soap’s Help a Child Reach 5 campaign as a great example of an enlightened self-interest campaign. Through this Unilever has raised awareness in India of the infections that can be prevented by simply hand washing with soap.

Experts warn, however, that companies should not think that having a charitable arm or foundation or launching a campaign will divert attention from problems in the business.

For example, when Starbucks recently launched a race campaign – #racetogether – it fell flat because consumers now associate the company with not paying its tax obligations. Social media has helped consumers spot inconsistencies quickly, says Brady.

Over the last ten years, the linking of good causes and business has been on the rise. One of the best examples is Pampers’ decade-long campaign with UNICEF that raises money for vaccinations in the developing world. Launched in 2006, it has helped to eliminate maternal and neonatal tetanus in 15 countries, and has protected 100 million mums and their newborn babies.

For three months every year, for every purchase of a pack of Pampers with the 1 pack = 1 vaccine logo, Pampers donates the cost of one vaccine to UNICEF. To date, 300 million vaccines have been funded.

Comic Relief’s tie-up with Sainsbury’s – which has been in place since 1999 – has also been a notable mutually beneficial arrangement.

Reckitt Benckiser, the Cillit Bang-to-Durex consumer goods group, first partnered with Save the Children in 2003. In 2013, it launched a new initiative with the charity to help stop children dying from diarrhoea, pledging to donate £23.5 million by the end of this year.

And in March, it launched a ground-breaking partnership to reduce child deaths from diarrhoea with the unveiling of two new-to-market hygiene and sanitation products which Reckitt Benckiser developed with 19 of its suppliers.

The first is a low cost germ protection soap, which is safe for children to use at the age of one, which requires less water and so is effective in areas where access to water is limited. The second is a toilet powder to make the use of pit latrines more hygienic. The fragrant powder keeps flies away, breaks down human waste and reduces the transmission of germs.

Reckitt Benckiser will not make any profits from the products, which are being piloted in Pakistan and Nigeria, before being rolled out to India, and will reinvest revenues in its Stop Diarrhoea campaign. They will also be produced locally, to encourage entrepreneurship.

Rakesh Kapoor, the Indian-born chief executive of Reckitt Benckiser, said at a Save the Children fundraiser last month: ‘This is a cause that is very close to my heart. Businesses such as RB have a responsibility beyond results and our larger role is to do more for the world.’

When Aviva, the former Norwich Union insurer, was rebranding in 2009 it started to look for a cause, which it could work on over the long term. The company’s Street to School programme, which works with street kids in 16 countries, was born.

Over the past five years, Aviva has partnered with many global NGOs and local charities, including child care charity Plan and British charity The Railway Children, helping to get more than 870,000 kids off the streets and into education.

David Schofield, group head of corporate responsibility at Aviva, says it is important not to think simply about bilateral relationships. Aviva’s community programme has worked well because the company worked with many different charities and used its employees’ advocacy skills to bring the issue to the highest levels, both national governments and at the UN.

It engaged its employees and its customers, using social media and even its sponsorship of Norwich City Football Club, to amplify the message.

Schofield says: ‘Lots of businesses just want a really nice partnership that they can put their brand all over, but you have to be smarter than that. The economic crisis has changed that. It’s really important for businesses to work out what the goals of governments are so that we can all work effectively and bring projects to scale, without duplication of effort.’

Schofield hopes that the summit on Sustainable Development Goals in September – a new set of visionary targets that all UN members will work towards – will provide the corporate world with new ‘muster points’.

But the fact that a growing number of charities are working with businesses does not mean that the two sides trust each other. There can be competing priorities and spats. Some charity sector experts fear that companies’ marketing departments are just getting low-cost promotion by piggy-backing on the charity’s campaigning and the charity gets little real assistance or benefit.

One financial services industry insider says: ‘Cultural fit can be an issue. In an NGO, people have made different choices and have different motivations. That can sometimes make for difficult working relationships. Equally, charities do not always understand the bureaucracy of a large corporate organisation.’

He adds: ‘Most of the time, companies come to you wanting money but they don’t necessarily see business as an easy source of money. Where the company can offer skills that are relevant to what the NGO is trying to do a really genuine partnership can occur.’

Equally, businesses need to do good housekeeping around their community or social programmes, asking whether they still fit with the company’s evolving strategy. He argues that businesses need to realise that entrenched problems are rarely capable of being fixed in a short timeframe and longer partnerships, of at least five years, are necessary.

‘Because partnerships evolve over time, things can become a bit haphazard and chaotic. Then, for instance, a new chief executive or new chairman will come along and want to see something fresh. Most large businesses now have a rationale or a vision that they want to achieve from their philanthropy. They don’t give away money for the sake of giving it away,’ he concludes.

Plan International has been working with Barclays on Banking on Change, a programme that will help the 2.5 billion unbanked people in the world, since 2009. By December 2012, the partnership, which runs in seven countries, had reached more than 513,000 individuals, surpassing its original target of 380,000.

In 2012, Barclays extended its commitment for a further three years with an additional £10 million investment. The latest phase focuses on the additional barriers faced by young people. The partnership has been held up as a model for cross-sectoral partnerships, delivering both social and business benefits for Barclays and its staff, and has received a Big Tick from the Business in the Community.

An open understanding of the objectives from both sides of the partnership from the outset is critical to its success, according to the experts. They will not work if one side is participating for the wrong reasons.

‘If you set up a relationship where the company wants to do something you think is wrong, but you don’t say because you need the money, then two years down the line, you will have a strained relationship,’ Adam Heuman, head of major partnerships at Plan, told a recent conference on sustainable business.

Which brings us back to Starbucks. Reputation is a fragile thing. If a company wants to enhance that by building a partnership with a deserving cause, it had better make sure that its reputation is fireproof to begin with.